JCY rises despite weak FY13 results, bleak outlook

by **Cals** Fri 22 Nov 2013, 22:37

Business & Markets 2013

Written by Ho Wah Foon of theedgemalaysia.com

Friday, 22 November 2013 17:06

KUALA LUMPUR (Nov 22): Shares of JCY International Bhd held firm today despite posting FY2013 results that were below expectations.
At 4.38 pm, the stock rose one sen or 1.7% to 59.5 sen, after hitting a high of 60.5 sen earlier, on trades of some 2 million shares.
Yesterday, the world’s leading HDD (hard disk drive) maker reported net loss of RM61.61 million for the full year ended September 2013, against a net profit RM427.29 million in the last financial year.

Total revenue slumped to RM1.59 billion, from RM2.24 billion a year ago.
The overall poor performance was primarily due to weaker sales volume and lower prices.
“JCY’s FY13 core net loss of RM79.5 million came in below expectations when compared to consensus’ full year core net loss of RM72.2 million respectively,” said Hong Leong Investment Bank (HLIB) in a note today.
JCY raised concern that mechanical component supply chain is becoming competitive, given the continued pressure on components pricing and possible over-capacity.
“We maintain our SELL call on the stock with a lower TP of RM0.32 (from RM0.37) based on FY14 P/E of 8.5x, the 2-year average P/E of US HDD brand manufacturers,” said HLIB.
RHB Research Institute said it is widening JCY’s FY14 core loss by 1% while reducing its FY15 core earnings by 5%.
“We reiterate our SELL call on the stock as we see another lackluster year ahead.
“We are of the view that JCY, being a pure HDD component maker, is exposed to product concentration risk … Our full value is unchanged at RM0.45,” said RHB.